Thank you for the answer, I'm learning a lot in this study. How about this: I may have had the wrong intuitive model up to now, I've envisioned the "flock" as all the participants on a particular instrument, and their action results in the prices on the chart curving around centers of gravity. But maybe the flock is several related instruments, and the spline and centers of gravity are on a n-time series (like n-dimensions, but time series) combination of them all. Is this heading in the right direction?
Good luck to you and best wishes!! Send me PM if you need help with something in particular. If it is not too sensitive, I might be able to help. I am glad that you are intrigued!
Yes, Now you are thinking!!!! Also, try to use % steps normalization function. It will help. It will compress and decompress the time component.
Thank you for the response, it offers data to suggest that I may be learning something from all my self-study, I'm happy. Ok, so n-time series space, flocking behavior with splines, % steps normalization, random walk with a dispersion rate of something, volatility clustering, kurtosis and fatter tails than a normal distribution, many different kinds of probability distributions, reversion to or away from a mean which may be undefined -- let me see if I can put this together, this is interesting. edit -- also arcsin and meander laws as noted above, I'll have to study those, I don't know what they are.
You know, people like you make posting on ET worthwhile! Best Luck and Best Wishes to you! The spark of interest , desire to learn, fascination with the subject - those are the things that I always hope to ignite. Thank you for your appreciation. Cheers, MAESTRO P.S. Unfortunately, I have to travel, but I should be back in a week.
Now back to the software upgrade. FIRST ARGUMENT EVERYTHING IS RANDOM Determinism would seem to be seriously challenged by quantum theory, which has proved randomness in as far as quantum events are concerned. This is however rejected by determinative thinkers who hold that determinism still holds at the macroscopic level. Thus a determinism adherent would hold for example that if we could have a sort of supercomputer, he would be able to predict every bubble in a wave or every toss of a coin. So a determinism adherent would say that in a macroscopic case, say a billiard ball hitting the side of the table and bouncing back, we could predict exactly by knowing the angle at which the ball hits the table and its initial velocity, the resultant angle and velocity after hitting the table. But is this so? In fact, this is not really true and randomness still enters the picture. The path of the ball is not in fact totally predictable but has random fluctuations in its path, but these fluctuations are of a quantum proportion and therefore are not measured in macroscopic measurements. If we take the toss of a coin for example (ignoring for the moment the question of whether the toss is actually random or not as it is not relevant right now), we can see that we get a probability factor of 50-50. It is because the toss is random that we get this probability. If we get two heads in a row for example, it does not mean that the third throw has a higher chance of turning up tails, the chances for it are still 50-50. However, because it is random and the chances of both are equal, in a large amount of throws, the two cancel each other and we get this 50-50 probability. If we throw it a hundred times, we have a good chance of getting a 50-50 result or a 49-51 result, we would not expect a 45-55 result. If we throw it a thousand times, we would get even less fluctuations proportionate to the number of throws, for example, say, 495-505. The fluctuation of 5 would be significant in 100 throws but of much less significance when compared with a thousand throws. Similarly, if we throw a million or a billion times, the fluctuations would be even further dampened compared to the total overall throws. A chance observer presented with the results of only a billion throws at a time and not individual throws would say that there is a determinism which dictates that the coin would fall equally on both sides each time. He might be tempted to say that, if a coin shows head at one throw, it is virtually certain that the next throw would show tails. But of course he would be wrong, there is no determinism here, it is a pseudo-determinism based on randomness at its heart. Similarly, we can consider a giant insurance company. Some people would die early and some would die late, but most people would die around a certain age, and a mean age can be calculated, say 72 years. A manager in such a company can make his calculations for his offers taking the age of 72 and would be correct. But based on this, no man can remain sanguine that he would die at 72 and no other age. Such processes where the overall result can be predicted on the basis of probability even though the individual processes are random are called stochastic processes. Now, we can take the case of a billiard ball. We know that the surfaces of both the billiard ball and the side rails of the table edge are in fact composed of billions of atoms with their electrons. Now, according to quantum theory, the electrons are not at a fixed position but can appear randomly at certain points when they interact with other electrons. So when it is considered at the level of quantum events, there is no predictable outcome, instead we can predict a number of outcomes and give their probability. So when the electrons of the billiard ball hit the electrons of the side rails of the table, there are in fact a huge number of random events taking place. But the randomness adds up, as in the case of an insurance company or the toss of a coin, to give a path which is weighed heavily in favor of the most probable path and which is the macroscopic path of the ball. But here, the most important point is that there are still random fluctuations in the path. Despite the ball going in the most probable path, the elements of randomness would not usually add up perfectly and so there are always random fluctuations in the path. This is similar to the event of throwing, say, a million tosses of the coin. We would not expect always an exact 500,000-500,000 heads or tails, and there is bound to be a minor fluctuation of say,10 or 20 throws or even a bit more on either side. So also in the case of the ball, there is a minor fluctuation in the path and it does not follow strictly the laws of macroscopic mechanics, there is always a strong likelihood of deviations from the path. These deviations, moreover, are derived from the deviations of the electrons in their path and other quantum events and hence are entirely random, and cannot be predicted. So in calculating the path of a billiard ball also, we cannot actually predict a single path, we can predict only multiple paths out of which the ball will take any particular path in a random manner, though we can still predict the most likely path, the second most likely path, and so on. The pertinent point though is that these paths vary by quantum fluctuations. The fluctuations are of a quantum amplitude and so on the macroscopic scale the fluctuations are totally irrelevant and in fact undetectable and we do not have to consider them at a practical level. Hence this is not true determinism but pseudo-determinism. These are actually random events that we consider as determined events because we regard them only at a practical level and not the theoretical level. But in theory the paths do in fact have very minute, quantum random fluctuations and so they are not determined. So determinism fails. This was well recognized by Einstein and other scientists who protested against the randomness introduced by quantum physics. They recognized that once randomness is proved at one level, it will be true for all levels. This point about the macroscopic path of a ball being random is not just a logical point. It is well recognized in mathematics and mechanics. The quantum fluctuations are well studied, and it is the work of Feynman which led to many breakthroughs in the study of such quantum paths. For example, the same point which I have made is made mathematically in the following way: âIn this way, the classical trajectory is qualitatively important. In general, the region of coherence is related to the âclassicalâ nature of the system. On the (macroscopic) classical scale, (pi-nh) is a frighteningly small amount, making the principal contributing trajectories those in a narrow band around the classical one. On the quantum scale, however, the action is small enough that (pi-nh) is enough to allow significant quantum deviations from the classical trajectory. Intuitively, this corresponds to the fundamental uncertainty in the particleâs position at any given time..â âPath Integrals in Quantum Mechanicsâ; Dennis V. Perepelitsa, MIT Department of Physics. Now, in a single instance of a single ball, the quantum fluctuations are insignificant for practical purposes. But in a very large system, say a billion balls hitting each other, the quantum fluctuations would begin to have a significant effect and make the end result unpredictable and random. Even if we have a perfect computer which could make all the calculations, it still would not be able to predict exactly the result of such a system as randomness would ensure that the results are unpredictable. Similarly, if we take a wave crashing on the sea shore, even theoretically a perfect supercomputer would not be able to predict the results of how many bubbles are formed and their pathways because of this randomness. Phenomena like the toss of a coin in practice are in-determinative because they are similar to the chaos effect. This is because the slightest change in initial conditions can cause very large changes in later conditions, and also the number of factors influencing the whole thing are so complex, that the events are unpredictable. There is no way that the toss can be determined. But it may still be argued that if the conditions were favorable, the toss could be predicted. Thus if we have a machine which can use exactly the same force each time at exactly the same angle, and the coin was thrown in vacuum, and the floor was perfectly even, then we would be able to determine the coin toss. But this is where quantum uncertainty steps in. It ensures that we could never build conditions like this. We could never ensure exactly the same force, exactly the same angle, or exactly an even floor, to the perfection that would be required to have a determinative toss. Hence the coin toss would naturally remain undetermined under any practical and theoretical conditions that we can dream up. The above is of course a very simplified, intuitive application of quantum theory to classical mechanics. Physicists grapple with much more complex theories like the Coherence principle and quantum chaos. But the basic principles of this argument stand true. So determinism fails at all levels. It cannot be that we have randomness at one level and determinism at another level. The determinism that we see in our practical macroscopic world is only pseudo-determinism, a practical determinism as opposed to true determinism, and finer calculations show that in fact there is randomness.
Hence? Since when? Quantum mechanics has at least 10 different interpretations. In some of them there is no state reduction and as such no randomness. Randomness arises only in certain interpretations of QM that allow state reduction. Randomness is not a property of the world but it is a property of an interpretation of a theory. This makes a heck of a difference. The many-world interpretation of QM that is gaining popularity is completely deterministic. Yes, phenomena can be modeled using random processes, but those that do that often lose when those that have the information already and they are certain always win. Using random processes to model trading is one of the biggest traps. All you should need is straight forward deductive reasoning with proper validated information to make money. Information costs money. Either you pay for information and you make a certain fortune or you play with random processes with the hope and dreams of winning.
ARGUMENT #2 Randomness no doubt determines events in our world Positions taken on determinism in modern times invariably have to contend with the fact that indeterminism has been proved quite comprehensively in the quantum world. Determinism however is maintained for the world at large by saying that quantum indeterminacy is a strange little phenomenon that is confined only to quantum events and has no relevancy at all for our macroscopic world. Quantum indeterminacy is thus boxed in in a safe little world of quantum events and is not allowed to intrude into the discussion about determinism at large. But when there is indeterminacy at any level, it is bound to cause the hole chain of determinacy to collapse. Determinacy involves arguments regarding cause and effect, a chain of cause and effect tightly following each other. After Hume of course, the very mention of a cause and effect relationship ought to raise a red flag. Determinists would argue that when an ocean wave crashes on the shore, each bubble is ultimately dependent on factors involving the formation of the wave and there is no random event even here. Thus events since the big bang itself have ensured that a particular wave would crash at a particular shore causing a particular amount of bubbles. However, quantum indeterminacy can and does intrude into this cozy chain of cause and effect. For example, when we take a kettle boiling and ultimately blowing off its lid, we have an example where activity at the quantum level intrudes ultimately into the macroscopic world. As the temperature of the water rises, the electrons absorb energy and buzz around, jumping from lower to higher orbits, and ultimately the atoms in the steam vibrate with a great deal of energy. As these atoms vibrate, they vibrate as molecular phenomena and the element of indeterminacy is present in their interactions, until the point when the vibrations burst off the lid. When the kettle blows off its lid, the angle is determined by randomness. No determinism in larger events outside determine this and quantum fluctuations certainly play a large part. The final vector of force which acts on the lid is the sum of all the random vectors of each molecule, and this is entirely random. These systems also work in other macro events. In analyzing volcanoes, we can infer that there must have been millions of such âkettle potâ phenomena deep inside and these random phenomena finally decided when the volcano was going to go off and on which side the lava would flow. Similarly, the direction taken by a spark when two quartz are rubbed together, determines a fire in a forest. Also, in a wave crashing on a shore, we can infer millions of such miniature âkettle potâ events which would ultimately determine the events, so that the bubbles would truly be random. Thus randomness in quantum events cannot be confined to quantum levels only. This randomness no doubt determines events in the macro world too, and so maintaining a position of determinism for the macro world when we know that it does not exist for the quantum world is untenable.
MAESTRO, the market looks random only to outsiders. To those that move the market it looks like the surest thing.